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Test your basic knowledge |
AP Microeconomics
Start Test
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Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Models where firms agree to mutually improve their situation
Collusive oligopoly
Variable inputs
Marginal tax rate
Total Welfare
2. The difference between total revenue and total explicit and implicit costs
Economic Profit
Marginal Resource Cost (MRC)
Spillover benefits
Break-even Point
3. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Market Equilibrium
Market power
Decreasing Cost industry
4. 0 < Ei < 1
Necessity
Non-collusive oligopoly
Fixed inputs
Price elasticity
5. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Normal Profit
Price discrimination
Profit Maximizing Resource Employment
Positive externality
6. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Perfect competition
Private goods
Price elasticity
Profit Maximizing Rule
7. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Marginal Revenue Product (MRP)
Substitute Goods
Determinants of Labor Demand
8. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Perfect competition
Implicit costs
Shutdown Point
Long Run
9. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Collusive oligopoly
Private goods
Substitution Effect
10. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Price elastic demand
Constrained Utility Maximization
Allocative Efficiency
11. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Public goods
Determinants of elasticity
Inferior Goods
12. Ei > 1
Luxury
Marginal Analysis
Average Total Cost (ATC)
Cartel
13. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Price Ceiling
Total Revenue Test
Collusive oligopoly
14. TR = P * Qd
Average Product of Labor (APL)
Total Revenue
Economics
Excess Capacity
15. The output where ATC is minimized and economic profit is zero
Break-even Point
Price Elasticity of Supply
Marginal Revenue Product (MRP)
Derived Demand
16. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Diseconomies of Scale
Economics
Short run
Economic Profit
17. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Marginal Benefit (MB)
Natural Monopoly
Constant cost industry
Dead Weight Loss
18. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Break-even Point
Monopoly long-run equilibrium
Relative Prices
Accounting Profit
19. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Luxury
Specialization
Perfectly inelastic
Price Ceiling
20. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Determinants of elasticity
Unit elastic demand
Four-firm concentration ratio
Market Economy (Capitalism)
21. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Private goods
Spillover costs
Dead Weight Loss
Short run
22. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Constant Returns to Scale
Spillover benefits
Collusive oligopoly
Economic Growth
23. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Diseconomies of Scale
Short run
Determinants of Demand
Decreasing Cost industry
24. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Necessity
Economic Growth
Monopsonist
Monopolistic competition
25. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Demand for Labor
Cartel
Market Economy (Capitalism)
Non-collusive oligopoly
26. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Positive externality
Constrained Utility Maximization
Law of Demand
27. Ed = 0 - no response to price change
Perfectly inelastic
Shutdown Point
Normal Goods
Determinants of Supply
28. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Constrained Utility Maximization
Market Equilibrium
Economics
Non-collusive oligopoly
29. The difference between total revenue and total explicit costs
Economic Profit
Income Effect
Accounting Profit
Non-collusive oligopoly
30. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Short run
Marginal Analysis
Constant cost industry
Market power
31. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Diseconomies of Scale
Spillover benefits
Complementary Goods
Law of Diminishing Marginal Utility
32. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Scarcity
Market Economy (Capitalism)
Shortage
Marginal Product of Labor (MPL)
33. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Non-collusive oligopoly
Spillover costs
Excess Capacity
Four-firm concentration ratio
34. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Constrained Utility Maximization
Perfectly competitive long-run equilibrium
Positive externality
Substitute Goods
35. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Demand for Labor
Constant Returns to Scale
Unit elastic demand
Constrained Utility Maximization
36. AFC = TFC/Q
Average Fixed Cost (AFC)
Profit Maximizing Rule
Collusive oligopoly
Least-Cost Rule
37. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Implicit costs
Increasing Cost Industry
Free-Rider Problem
Demand for Labor
38. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Resources
Average Product of Labor (APL)
Marginal Cost (MC)
Shortage
39. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Opportunity Cost
Income Effect
Demand for Labor
Long Run
40. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Price Ceiling
Specialization
Total Product of Labor (TPL)
Excess Capacity
41. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Marginal Resource Cost (MRC)
Negative externality
Accounting Profit
Perfectly elastic
42. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Unit elastic demand
Determinants of Supply
Law of Demand
Negative externality
43. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Total Product of Labor (TPL)
Law of Increasing Costs
Allocative Efficiency
Unit elastic demand
44. Ed < 1
Substitution Effect
Unit elastic demand
Price inelastic demand
Incidence of Tax
45. The practice of selling essentially the same good to different groups of consumers at different prices
Price discrimination
Income Elasticity
Law of Supply
Monopolistic competition
46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Natural Monopoly
Shutdown Point
Normal Profit
Substitution Effect
47. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Marginal Revenue Product (MRP)
Marginal Productivity Theory
Explicit costs
48. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Price Ceiling
Price discrimination
Spillover benefits
Marginal tax rate
49. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Law of Diminishing Marginal Utility
Total Fixed Costs (TFC)
Determinants of Supply
Price inelastic demand
50. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Excise Tax
Marginal Revenue Product (MRP)
Marginal Analysis
Average Product of Labor (APL)